Competition is heating up – NZ’s biggest aged care provider Ryman Healthcare set to debut on the ASX next week

Regis Healthcare is set to have a contemporary arrive in Australia in a big way. NZ’s Ryman Healthcare is making definitive moves to claim market share in Australia with a $2 billion Australian Securities Exchange listing slotted for next week.

The provider will maintain its primary listing in NZ, however the dual-listing on the Australian exchange come October 1 is a clear marker of the interpretation of upcoming demand and returns in the Australian aged care horizon. At scale and operation, Ryman is set to be another titan at the top, a peer to Regis healthcare in market capitalisation.

Long-term growth

Speaking to the AFR, Ryman’s chief executive, Naomi James, shares confirmation that Australia’s aged care growth is likely just getting started, “Australia is central to our long-term growth. We’re the largest provider in New Zealand, and we’ve got a smaller position in Australia and a really well established business now in Victoria”.

After widespread reports of a highly turbulent time for the group, newly recruited James has shown a strategic aptitude to steer the ship around. The company, over the last 14 years, has invested billions already for a foothold in Australia, with Victoria being the area of focus. Owning soon-to-be thirteen villages within the state, the group already employs over 1500 staff to care for a resident base of around 2200 residents.

In her conversation with AFR James sees Australia’s ageing demographic as sustaining a continued intensity of demand for the group’s aged care offerings. Having already raised A$880 million in March this year, James has led Ryman into a strategic position to minimise debt holdings and elevate Ryman’s financial position ahead of the decisive ASX move.

Lowering debt

Naming the problem of debt that many providers have run into in the period after the pandemic, with high inflation biting expense levels, James shares that Ryman’s cost holdings were simply too elevated, and that a strategic shift was warranted.

She says, “The balance sheet just couldn’t withstand that, and that’s why we needed to recapitalise.”

Many providers are working to lower their debt holdings to pivot into a position to be ready for the increasing demand as boomers enter the aged care sector. Being in a position to dynamically improve build rates and market share will be paramount in the years to come.

Slew of acquisitions

In a move to raise funding ahead of their market capitalization strategy in Australia, Ryman is likely seeking to pivot to respond to the incoming Act come November 1. Larger providers have been active in recent months seeking to, particularly through acquisition, build up their market share through acquisitions.

Regis’ acquisition of high-performing boutique provider Rockpool is one such instance of the strategy that larger players have been using to position themselves to best meet demand and yield the returns from market share.

Boomer cohort ageing

Speaking to AFR, James overtly names the demographic shift upcoming in Australia as directly impacting their strategy across the Tasman.

“Ryman is a property and healthcare business, so it’s uniquely positioned between these two big macro trends of a housing shortage and our rapidly growing ageing population”.

“By listing on the ASX, it gives us that chance to broaden the Australian shareholder base in a market where we’ve already made significant investment.”

Full care offering

She also notes what seems to be a key strategy to secure aged care services from initial entry needs to final care. While a business strategy to yield consistent returns, the capacity to ensure streamlined care throughout the progression of aged care needs may prove critical to ensuring that no points of transitional care allow for seniors to fall through the cracks as they move through the system. Particularly with hospital discharge processes having shown to be susceptible to seniors’ care interruption, the model of care that supports a tracked and consistent quality of care is critical systemically and morally. 

“It [Ryman] has a unique model, which we call the continuum of care. What it does is provide the ability for people to live independently, get care and support in their home, right through to hospital and end-of-life care”, she said to AFR. 

Accelerating demand

“What’s playing out now is the shift in that ageing population into an age where their care needs start to emerge. It’s 80 years this month since World War II ended, so from here on, the post-war generation moves into their 80s in large numbers, and that’s typically where healthcare and assisted living needs really start to accelerate.”

The Australian government has been clear in its messaging. More beds need to be built in the Australian aged care sector. With moves from large players like Ryman, it may be a hopeful sign that outside investor interest will be piqued to support current providers to capitalize and be in a position to accelerate builds with assurance of returns in the future.